Thursday, January 7, 2016

After a few clarification...Malaysia's No 1 Value Extractor still could not get it right.

Further Clarification on Bandar Malaysia Equity Sale1MDB notes that certain questions, queries and concerns have been raised by various parties over the recently announced sale of 60% equity in the Bandar Malaysia project, to the consortium comprising Iskandar Waterfront Holdings (IWH) and China Railway Engineering Corporation (CREC) ("Consortium").We provide below a detailed explanation, which we trust will conclusively dispel the half-truths and misleading statements made by various irresponsible parties. 1. Bandar Malaysia Sale - Current Proposed Deal StructureThe Sg Besi land is currently owned by TRX City Sdn Bhd (formerly 1MDB Real Estate Sdn Bhd) and Bandar Malaysia Sdn Bhd. TRX City Sdn Bhd owns 4 (four) plots and Bandar Malaysia Sdn Bhd owns 12 (twelve) plots which collectively make up the acreage of the project.Both companies are ultimately owned 100% by 1MDB. The current proposed deal structure, is for a New SPV 1 to be formed, that will directly purchase the land (or indirectly purchase, for example through a New SPV 2 or through purchase of equity in Bandar Malaysia Sdn Bhd). New SPV 1 will ultimately own all 16 plots of the Sg Besi land and develop the Bandar Malaysia project.New SPV 1 will be owned 40% by 1MDB or Minister of Finance Incorporated (MoF Inc) and 60% by the IWH-CREC Consortium.The Consortium shareholding is 40% CREC and and 60% IWH.IWH shareholding is 40% Kumpulan Prasarana Rakyat Johor (KPRJ – Johor State Govt) and 60% Credence Resources (Tan Sri Dato’ Lim Kang Hoo).So, given the above shareholdings of the various parties the ultimate New SPV1 ownership can be described in the following ways:A. 40% 1MDB or MOF Inc (should the shares be transferred), 36% IWH and 24% CREC. The ultimate project ownership therefore is 76% Malaysian and 24% Chinese.OR, in the alternative:B. 40% 1MDB or MOF Inc (should the shares be transferred), 22% Credence Resources, 14% KPRJ and 24% CREC. The ultimate project ownership is therefore 54% Government and 46% private sector (Government: Federal 40% via 1MDB/MOF Inc and State 14% via KPRJ. Private sector: 22% Credence Resources and 24% CREC).2. Difference in announced values RM7.41 billion (1MDB) vs RM5.3 billion (CREC)In essence, 1MDB are selling land, which is what we own.However, there are two liabilities indirectly linked to the land i.e.:A. Remainder costs to complete relocation of Pangkalan Udara KL (PUKL Relocation)

The main relocation contract and development agreement was executed between 1MDB and the Government of Malaysia for a contract value of approximately RM2.7 billion. This cost includes, amongst others, new land acquisition costs, construction costs, fit out/equipment costs and relocation costs.

1MDB in turn, contracted to what was then named 1MDB Real Estate Sdn Bhd (now renamed TRX City Sdn Bhd) for certain construction aspects of the PUKL Relocation. TRX City Sdn Bhd in turn, then contracted Perbadanan Perwira Hartanah Malaysia (PPHM, which is a 100% subsidiary of Lembaga Tabung Angkatan Tentera) as a Turn Key contractor to deliver the construction aspects of the PUKL Relocation.

PPHM has, in turn, appointed over 50 qualified Bumiputra contractors as sub-contractors to deliver various aspects of the construction. The remaining construction costs plus variation orders plus other costs of the PUKL Relocation are currently estimated at up to RM1.9 billion.

It is important to highlight that PPHM as the Turn Key contractor and the over 50 Bumiputra subcontractors will continue to remain as the designated contractors and will continue to perform their roles exclusively, regardless of the final deal structure.

These contractors have been approved by the relevant authorities and construction is supervised by relevant officials from the Ministry of Defence and Ministry of Home Affairs. As the construction will continue to be carried out by the current approved contractors, there is therefore no question of any impact on national security through the sale by 1MDB of its 60% interest in the Bandar Malaysia project.

B. The Bandar Malaysia Sukuk (Sukuk) – this debt is at Bandar Malaysia Sdn. Bhd. (Nominal Value RM2.4 billion at maturity, accrued value approximately RM1.63 billion at 31 December 2015)3. Final Purchase Consideration DeterminationTo determine the final purchase consideration to be received by 1MDB, the starting point, as agreed in the Share Sale and Purchase Agreement (SSA) executed between 1MDB and the Consortium, is 100% of the land value = RM12.35 billion.

For its 60% share, the Consortium has agreed to pay RM7.41 billion (Purchase Consideration), of which a 10% deposit of RM741 million is payable upon execution of the SSA.

Whilst it is the intention of 1MDB and the Consortium to transfer the remainder PUKL Relocation construction costs and the Sukuk debt to the New SPV 1 (which will be owned 40% by 1MDB/MOF Inc and 60% by Consortium), the transfer will require:

determination and agreement between the parties of the final costs for the PUKL Relocation and the Sukuk and;

all relevant consents, including but not limited to, from the Government of Malaysia, the contractor (PPHM) and sukuk investors.

Should 1MDB and the Consortium agree on the costs and manage to procure the consents, then the Consortium will pay its 60% share of the costs and the Purchase Consideration will be adjusted accordingly, i.e. RM12.35 billion Land Value less RM1.9 billion PUKL Relocation Costs less RM1.63 billion Sukuk Costs = RM8.8 billion of which 60% Consortium share is RM5.3 billion.

However, if the costs cannot be agreed or the consents cannot be procured, then the Purchase Consideration of RM7.41 billion will be paid in full to 1MDB, who will still be responsible for the costs.

In either scenario above, the Purchase Consideration of RM7.41 billion to 1MDB does not change, the only difference is whether 1MDB receives the amount in full, then pays for the costs OR whether the Consortium pays for its share of the costs and remits the balance of RM5.3 billion to 1MDB.

Where should we start folks?

How about this

"We provide below a detailed explanation, which we trust will conclusively dispel the half-truths and misleading statements made by various irresponsible parties. "
Holy Shiite!!

Half Truths and Misleading Statements...

Dey Kandasamy

Lu punya Press Statement yg Teramat Misleading doe

Anyway as usual with my Public Interest Posting...we shall DEAL ONLY with VALIDATED DATA

The 12 Plots of Land went from 363Million (1MDB) to 650Million (1MDBRE) to 4.2Billion (BMSB)

Excellent Value Creation there mate!!!!!

Anyway I have not found any reference at all about the remaining 4 Plots held by 1MDBRE

Please let me know which page of the annual report says that there is actually 16 Plots of Sg Besi Land.

UPDATE 12/01 Found 3 1 still unaccounted for

CHAPTER 2: WHO's LIABILITY IS IT?

We now need to study what they meant when they said "The Acquisition is not complete pending the execution certain other related agreements" above

What agreement are these?

These agreements later became Collaterals for the 2.4Billion Sukuk issued by BMSB

Let us now go back to what they said

"2. Difference in announced values RM7.41 billion (1MDB) vs RM5.3 billion (CREC)In essence, 1MDB are selling land, which is what we own.However, there are two liabilities indirectly linked to the land i.e.:A. Remainder costs to complete relocation of Pangkalan Udara KL (PUKL Relocation)

The main relocation contract and development agreement was executed between 1MDB and the Government of Malaysia for a contract value of approximately RM2.7 billion. This cost includes, amongst others, new land acquisition costs, construction costs, fit out/equipment costs and relocation costs.

1MDB in turn, contracted to what was then named 1MDB Real Estate Sdn Bhd (now renamed TRX City Sdn Bhd) for certain construction aspects of the PUKL Relocation. TRX City Sdn Bhd in turn, then contracted Perbadanan Perwira Hartanah Malaysia (PPHM, which is a 100% subsidiary of Lembaga Tabung Angkatan Tentera) as a Turn Key contractor to deliver the construction aspects of the PUKL Relocation.

2 Liabilities indirectly linked to the Land????

Only problem is that these are not BMSB Liabilities

These are 1MDB's and 1MDBRE's

And following their standard Ali Baba SOP they contracted Perbadanan Perwira Hartanah to undertake the Construction Cost

We now need to look back at CREC Announcement

ANY MENTION OF SPV 1 or SPV 2 ?THE ONLY THING MENTIONED IS BMSB

It even said the they have ENTERED INTO A SHARE SALE AGREEMENT WITH 1MDBRE TO PURCHASE BMSB

Anyway we now go to the other part where 1MDB said that it require "all relevant consents, including but not limited to, from the Government of Malaysia, the contractor (PPHM) and sukuk investors."

Why is that?

Recall the Bandar Malaysia 2.4Billion Sukuk

Nak Jual BMSB must get BondHolders Approval

Jual Tanah Sg Besi duit musti buat bayar hutang dulu...

The above is from their annual report.....look at (e) it says 5 Development Agreements.

I have another data from the Principal Terms and Condition of the Sukuk which says 8 Development Agreements as per the picture above on the Relocation Agreements.....wallahwualam sapa yg betul

But there's one particular positive covenant to the Sukuk Issuance which 1MDB will /or has breached with the sale of BMSB

SUMMARY

CREC entered into S&P to purchase BMSB from 1MDB RE

1MDB says CREC will buy either SPV 1 or SPV 2 or whatever shit they will cook up in the next 24hours

1MDB talks about Relocation Cost Liabilities attached to the Land but CREC is buying the Equity in BMSB and all liabilities is NOT with BMSB but is with 1MDBRE or 1MDB

SUKUK Holders can BLOCK this TRANSACTION using all the terms embedded in the Sukuk Agreement.

What is this 4 Additional Plot of land that 1MDB is talking about? All References in the Annua Report points to 12 Plot of Land. Is 1MDB trying to inject TRX land into the Deal? Or Did 1MDB break up the original plots being transfered by GOM to 1MDB? (refer update above, 3 additional lots was identified, 1 is still an unknown)

Minds are like parachutes; they work best when open. -Lord Thomas Dewer

Why is he still PM?

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